Nippon Sanso (4091) Q2 2025 earnings summary

Executive summary

• Revenue increased 3.3% year-over-year in Q2 to ¥313.7bn, with core operating income up 10.4% to ¥45.1bn, but net income declined 15.3% to ¥21.0bn due to non-recurring losses and higher finance costs.

• 1H FYE2025 revenue rose 5.0% to ¥643.0bn, core operating income up 14.5% to ¥93.4bn, and net income was flat at ¥50.7bn.

• Price management, operational excellence, and productivity gains offset lower volumes and cost inflation, especially in Japan and the US.

• A non-recurring impairment charge of ¥10.8bn was recorded for a discontinued U.S. hydrogen project after a customer bankruptcy.

• The group continues to focus on sustainability, non-financial KPIs, and business expansion, with a new European acquisition announced.

Financial highlights

• Q2 core operating income margin improved to 14.4% from 13.5% year-over-year; EBITDA margin rose to 23.4%.

• Non-recurring losses of ¥10.8bn in Q2, mainly from impairment on a U.S. hydrogen project and business liquidation in Asia & Oceania.

• Free cash flow for 1H was ¥32.2bn, nearly flat year-over-year, with operating cash flow up 36% and investing activities up 57% due to large CapEx projects.

• Overseas revenue ratio reached 68.2%, up 2.7% from previous year.

• Adjusted net D/E ratio at 0.71, with net interest-bearing liabilities at ¥782.5bn.

Outlook and guidance

• Full-year FYE2025 revenue forecast at ¥1,300.0bn (+3.6% YoY), core operating income at ¥177.0bn (+6.6%), and net income at ¥105.0bn to ¥108.0bn (-0.9% to -1.2%).

• Core operating income margin expected at 13.6%, EBITDA margin at 22.4%.

• IFRS operating income, profit before tax, and net income expected to decrease 3%-4% due to the impairment charge.

• No revisions to previously announced forecasts; annual dividend forecast at ¥48.00 per share.

• Second half assumes FX rates of 145.31 USD/JPY and 157.72 EUR/JPY.